A mission from the IMF’s European Department, headed by Mr. Thomas Richardson, will work in Chisinau from Wednesday, April 25, to Tuesday, May 8, 2007.

The main task of the IMF mission is to take stock of the past performance of the government and the National Bank of Moldova in meeting commitments under the program, and to assess the macroeconomic outlook for the remainder of 2007 taking into account the recent developments such as the increase in gas prices, as well as the outlook of resuming wine exports to Russia. In the context of the second review under the Poverty Reduction and Growth Facility (PRGF), the mission will also attempt to come to an agreement with the government and the National Bank on macro projections for the reminder of the year.[1] We expect that the updated memorandum on economic and financial policies that is being drafted by government will focus on continued financial sector reform, improved fiscal management, and structural reforms designed to improve the business environment.

A key part of the discussion will be the authorities’ recently announced capital, fiscal and tax initiatives. It is paramount that any such changes be consistent with preserving macroeconomic stability and lowering inflation. International experience shows that reforms of this type are only effective when coupled with efforts to strengthen tax administration, and to this end the IMF and other international partners are providing assistance to support the modernization strategy of the State Tax Inspectorate. More broadly,  fundamental steps to improve the business climate—including elimination of corruption in the judicial system, improvements in infrastructure, market competition reform, and reducing government interference in the economy—are likely to be more important than just these tax measures for promoting investment, economic growth, and poverty reduction in Moldova.

As usual, Mr. Richardson and his team will hold a short press briefing at the end of the visit.